By TOM BELL, Staff Writer Sunday, October 22, 2006
Taxpayer Bill of Rights
Do you want to limit increases in state and local government spending to the rate of inflation plus population growth and to require voter approval for all tax and fee increases?
Details Read the legislation
Several legal opinions have been written on the Taxpayer Bill of Rights:
Gary Wood for officials of the City of Portland Martin Eisenstein for the city of Lewiston Pat Scully for municipal clients of Bernstein Shur, posted by the Maine Municipal Association Richard Spencer for the Maine School Management Association Attorney General Steven Rowe for Speaker of the House John Richardson Michael Duddy for the Maine Heritage Policy Center A report by the Maine Municipal Association on the potential future impact
COLORADO SPRINGS, Colo. – Douglas Bruce op- ened his booklet-sized copy of the U.S. Constitution, which he keeps in his shirt pocket at all times, and turned to the page that lists the Bill of Rights.
For Bruce, the Colorado anti-tax activist who wrote a measure to cap government spending and taxes he called the Taxpayers Bill of Rights — or TABOR — those words sum up his wariness of governmental power. The revenue cap, he said, is about shaking up the political order, empowering voters at the expense of politicians.
But the shake-up has also come at the expense of ordinary Coloradans who have seen government services evaporate, said Ann Turner, who runs a nonprofit agency that helps mentally disabled adults in this sprawling city nearly 70 miles south of Denver.
“If you have a family member who suffers from alcoholism, substance abuse, mental illness, depression or developmental disability, don’t come to Colorado,” she said. “Because nobody here is going to help you.”
For Maine residents preparing to vote Nov. 7 on a version of TABOR, the experience of people in Colorado’s cities and towns offers real-life lessons and a possible glimpse of what’s in store for Maine, where proponents and opponents are locked in a struggle for voters’ support and disagree on what the measure would do.
For months now, Colorado business leaders, politicians, doctors, mothers and teachers have been touring Maine and telling the story of how the spending cap either caused financial havoc in the Rocky Mountain state, or delivered it to an economic promised land.
While Colorado voters remain sharply divided over the measure 14 years after it was passed, many agree on one thing: It slowed the growth of the state budget and changed the nature of government in the process.
The constitutional amendment, which gives taxpayers annual rebates for revenues that exceed spending limits, has delivered on some of its promises. Since 1992, the state budget has grown at a rate slower than the state economy, and taxpayers have received $3.2 billion in rebates.
But TABOR also led to major funding cuts for the state’s higher education system and health and human services programs, and it contributed to a statewide budget crisis when the state’s economy fell into recession in 2001.
In towns and cities across this large and diverse state, local officials found ways to circumvent the spending limits, to the point where they no longer exist for the most part at the local level.
The measure has enjoyed more support at the state level, but even that has waned. A year ago, Colorado residents voted to suspend the spending limits for five years.
Konnie Martin, who runs a group of health and dental clinics for the poor 110 miles away in rural Alamosa County, said she supported TABOR in 1992 because she liked the idea of being able to vote on any tax increase. But she said she didn’t realize at the time how much it would affect people’s lives. “Never ever would I vote for it again.”
Bruce remains committed to TABOR and is proud that other states, like Maine, are considering their own version. He carries with him large charts that show that Colorado’s budget in real dollars has never experienced cuts since 1992. Rather, the state budget has increased 130 percent, he said.
Reducing the size of government with cuts is not easy — it’s like squeezing a balloon, he explained. His tax cap, he said, offers a better way.
“You control the amount of air in the balloon,” he said. “Then you let some of the air out to provide tax relief for the people.”
Colorado has never been a big “tax and spend” state. Historically, Colorado’s ranking in terms of tax burden has hovered around the middle of states, according to the Bell Policy Center, a liberal research group based in Denver.
The referendum in 1992 was passed by 52 percent of voters after three previous failed ballot initiatives. Bruce, who led the campaign, said he learned from past failures. The others failed because they would have cut government spending immediately and were viewed as too extreme.
The TABOR referendum succeeded at the ballot box, he believes, because he framed the issue around giving people the chance to vote on any tax increase. The campaign bumper sticker that year read, “Vote on Taxes — Yes on #1.”
“Who should decide how much government we can afford?” he said. “We the people who earn it or the politicians who want to spend it?”
Bruce and TABOR’s supporters say the cap — the strictest revenue limit imposed on government in the United States — has lowered Colorado’s tax burden, leaving more money in the hands of the private sector and fueling investment and growth. In 2001 alone, the state refunded $1 billion to taxpayers.
Critics say TABOR has hamstrung the state with rigid formulas, making it less responsive to changes in the economy and the needs of residents.
If Maine voters approve Question 1, Maine will become only the second state to impose a TABOR cap. While 29 other states have spending or revenue caps, Colorado is the only state that uses a formula based on inflation and population growth to limit the growth of the entire state budget. At the local level, Colorado’s TABOR uses a more lenient formula based on inflation, school enrollments and the value of new construction.
While TABOR is the most pressing political topic in Maine at the moment, many ordinary people in Colorado have never heard of it or have forgotten about it. About 1.3 million people have moved to the state since it passed. Whether they live in booming Colorado Springs or rural Alamosa County, people here often give puzzled looks when the acronym “TABOR” is mentioned.
Voter interest in the issue has been fleeting, said Sam Mamet, executive director the Colorado Municipal League, an advocacy group for towns and cities.
“It’s one of those feel-good measures that, once passed, becomes the product of inside baseball,” he said.
A 2005 poll sponsored by the AARP of 1,001 likely Colorado voters found that 55 percent supported repealing TABOR outright.
TABOR’s impact in Colorado’s cities and towns has waned since 1992 because spending limits for the most part have long ago been rejected at the local level.
Forty-four of the state’s 64 counties have waived refunds from the state and permanently increased spending limits. All but five of the state’s 178 school districts have voted to waive the limit to various degrees. Municipalities have held 486 elections seeking TABOR waivers and have won voter approval 88 percent of the time.
This process is called “de-Brucing” after Douglas Bruce. Colorado courts have ruled that local governments can exempt themselves from the TABOR limits for an extended period of time and permanently for certain revenue streams.
School District 11, which includes downtown Colorado Springs, is one of the five districts that has not “de-Bruced.” That’s because Bruce, a relentless defender of the spending cap, lives in the district, said Glenn Gustafson, the school district’s chief financial officer.
Gustafson said the district’s budget has not suffered under TABOR because the state provides the funds that the district can’t raise on its own.
State school funding is also protected from TABOR limits. Because of concerns that spending for Colorado’s schools was failing to keep the pace with inflation and enrollment growth, state voters six years ago passed a constitutional amendment that requires per-pupil spending on Colorado schools be increased by at least the rate of inflation, plus 1 percent.
The main impact of life under TABOR, Gustafson said, is that it discourages the school district from seeking out-of-state or local grants, or renting out facilities, such as a gym. If the district finds any additional money, he said, it must cut other parts of the school budget by an equal amount in order to stay under the spending limit.
Opposition to TABOR is greatest in rural counties, like Alamosa County, the hub of a potato-growing region. People there are generally poorer and more dependent on state services.
Local officials there say people personally know them and often trust them more than they do state officials. But TABOR caused budgets to be created by formula rather than by elected leaders, said Darius Allen, a cattle rancher and chairman of the Alamosa County Board of Commissioners.
“We are a Republican form of government. We were elected to make decisions,” Allen said as he drove his truck along his 1,600-acre ranch in the heart of the San Luis Valley. “I don’t want people to have to vote just so we can buy a new pickup truck for the county,” he said.
The measure has had a much bigger impact on Colorado’s state budget.
TABOR stipulates that all the revenues that exceed the cap be returned to taxpayers. When Colorado’s economy was booming and revenues exceeded the limit, middle-class families received annual rebate checks worth several hundred dollars.
Despite the booming economy today, taxpayers here no longer get rebate checks because voters approved a measure to allow the state to spend revenue collected that exceeds the spending limit. Colorado’s taxes per capita today are lower than all but three states nationally. Colorado’s population — now about 4.8 million — has increased 37 percent since 1992.
Paul Prentice, a private economist, said Colorado’s low taxes have lured people and business to the state. He said he moved to Colorado Springs, from Washington, D.C., in part because TABOR assured him that Colorado’s taxes would remain low.
Colorado’s income tax is a flat 4.63 percent. The state’s residential property taxes are also low, less than $1,000 for a typical middle-class home. The low property taxes are the result of a 1982 ballot question that had the unintended effect of shifting the property tax burden onto businesses. Unlike in Maine, local governments have the authority to impose a sales tax and have become increasingly dependent on sales tax revenue. The combined sales tax in most communities is more than 7 percent. The ski resort town of Snowmass, near Aspen, has the highest rate, 9.9 percent.
Prentice said he likes that TABOR gives voters the final say on tax increases. “It returns fiscal power to the people from whom the taxes are extracted to begin with,” he said.
Kent Lambert of Colorado Springs, a Republican candidate for state representative, said TABOR is necessary because politicians aren’t up to the task. “There’s no collective will to control state spending,” he said.
Not all state departments have been affected equally under TABOR. The 2000 vote to increase funding for Colorado schools — when combined with TABOR limits on the state budget — had the unintended effect of shrinking the proportion of the budget for higher education and health and human service agencies.
The University of Colorado System’s share of the state budget has fallen from 20 percent in 1990 to less than 8 percent in fiscal 2007. To make up the difference, the system boosted tuition. In-state tuition at the University of Colorado at Colorado Springs has jumped 63 percent since 2001, to $4,066, not including fees.
From 1991 to 2005, total state support to colleges and universities in Colorado grew at the second-slowest rate in the nation — averaging 1 percent annually.
Public health departments were hard hit when the state faced an $800 million budget shortfall in 2002. Programs aimed at protecting food safety, inspecting child care centers and monitoring the safety of water and air were cut by more than 30 percent between 2002 and 2004, according to the Bell Policy Center.
In Colorado Springs, a city of 375,000 people, about 1,000 mentally disabled people are on a waiting list for services. The wait is seven to 10 years, said Turner, executive director of the Cheyenne Village Inc., a nonprofit service provider funded by donations and state grants.
“It’s heartbreaking,” Turner said. “We get calls from families who have loved ones with devastating disabilities, and there is no help available to them.”
Because the people the agency serves are growing older, their health care costs are rising much faster than inflation, she said. To prevent cutbacks in services, staff wages have been frozen.
Amanda Hildreth said she makes $10.62 an hour working in a group home for mentally disabled adults. She said she has had only one cost-of-living raise over the last five years. Still, she’s not looking for another job.
“It’s not much for what I do,” she said as she helped cook dinner for the household. “You really get attached to these guys, and I couldn’t see myself leaving them.”
As in other states, Colorado’s state revenues plummeted during a recession after the terrorist attacks of Sept. 11, 2001, and the bursting of the high-tech bubble. Because the state had returned all the surplus money to taxpayers, it didn’t have any rainy day funds to make up for the shortfall.
But Colorado has another problem. The TABOR revenue limit for the upcoming year is based on revenues the state took in the previous year. When the economy rebounds from a recession and is flush with new revenues, it nevertheless faces a lower revenue cap. Coloradans call this the “ratchet effect” because, like a ratchet wrench, it allows movement in only one direction.
In 2005, when Colorado’s resurgent economy boosted revenues, the state was faced with making $400 million in budget cuts even as it prepared to send $3.7 billion worth of tax rebates back to taxpayers. Higher education officials warned that community colleges would close and that the University of Colorado System would reach zero state funding within a decade.
TABOR opponents, who had made several attempts to eliminate or weaken the spending cap, finally found some success in 2005.
Colorado voters that year by a narrow margin suspended the TABOR revenue limit on the state budget for five years, giving up an average rebate of $491 per taxpayer.
The business community, which has long supported the basic tenets of TABOR, broke with its traditional Republican allies and endorsed the ballot question, dubbed the “TABOR time-out.”
Even in Colorado Springs, a Republican stronghold and the epicenter for TABOR support, business leaders overwhelmingly supported suspending TABOR.
Businesspeople have come to see TABOR as a flawed measure that has hurt the government’s ability to help the state remain competitive economically and to invest in such things as transportation and a public university system, said Scott Bacon, the Colorado sales manager for Wells Fargo Investments.
“All the unintended consequences of TABOR have strangled us,” said Bacon, who was attending the Southern Colorado Economic Forum with the rest of the city’s business elite at a downtown hotel recently.
Bruce urges Maine voters to follow Colorado’s example. “Why not have an experiment in freedom, “ he said. “If the people of Maine think they no longer want to be free, they can make a decision on that two, three, five years later. They can vote themselves back into slavery.”
Staff Writer Tom Bell can be contacted at 791-6369 or at:
Oct 22, 2006 9:18 AM
The critical role the Gallagher Amendment has on Colorado fiscal affairs still escapes Tom Bell and the rest of the Maine media. Why can’t they do some research and understand that impact? Could it be that they would find that it has much greater impact than “TABOR” has and therefore doesn’t fit their anti TABOR message.
The fact of the matter is that property taxes on a $200,000 house in Colorado is in the mid 1000’s while they are over $4,000 in Lewiston. How is that a bad thing?
P.S. – Average incomes in Colorado are much higher than in Maine. They make more money but pay less in taxes.
Aaron of Farmingdale, ME
Oct 22, 2006 9:13 AM
Comparing the lack of a TABOR to slavery is nonsense and absurd, and reflects the antigovernment agenda of its Colorado supporters(who are fewer in number than when it was passed, according to this article)
If TABOR doen’t require cuts, why does the University of Colorado expect to get zero state funding in few years? Why were Community colleges preparing to close down?
If TABOR doesn’t require cuts, why are there a thousand mentally ill people waiting seven years for help? Why are the salaries of health workers being frozen? What, should they work for free to save us fifty bucks a year?
If TABOR doesn’t require cuts, why have child care inspections been cut by 30 percent?
As Mr. Allen said in this article, do the people need to vote on every little thing? Our style of government is republican. We choose people to work for us in the government. If you don’t like what they do, vote them out. This is why TABOR was proposed. Mary Adams’ supporters cannot get people elected to slash the state budget(I don’t support such a view, but I would be the first to say they might this year, even without TABOR) It’s not power to the people, it’s power to the right-wing.
People do not have time to vote on every little thing in the budget. People don’t vote as it is today.
Why is it 55 percent of Colorado voters would repeal TABOR if they could? Because it works so well?
Colorado’s property taxes are lower because they have local and county sales taxes. They can do that because they don’t have a non-sales tax state next to them and because their large service areas are in the center of the state, where people can’t travel out of state as easily.
Don Michel of Cape Neddick, ME
Oct 22, 2006 8:36 AM
Perhaps the greatest virtue of the TABOR proposal is that if it should pass, it will force more participation in the process of determining how tax money is spent. I think it is an entirely different matter to see your representatives on the street and solicit support for some program or other, or to have to step into the voting booth and vote to spend the money. The former is easy to do, the latter requires a real understanding of the costs. A democratic republic only works when the electorate is informed and particiaptes.